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China-Germany commodity trade and the S-curve

Mohsen Bahmani-Oskooee () and Dan Xi

Journal of Chinese Economic and Foreign Trade Studies, 2012, vol. 5, issue 1, 20-28

Abstract: Purpose - Impact of currency depreciation or devaluation on the trade balance is not instantaneous. Indeed, because of adjustment lags favorable effects of depreciation is only realized in the future. This short-run dynamics of the trade balance is summarized by the S-Curve phenomenon. The purpose of this paper is to test this phenomenon by using commodity level data between China and Germany. Design/methodology/approach - The methodology is based on cross-correlation function. Findings - Out of 62 industries studied, only 22 support the S-Curve or enjoy improvement in their trade balance in the future. The list included small and large industries as well as durable and non-durable goods. Originality/value - No study in the literature has considered commodity level trade between China and Germany.

Keywords: China; Germany; Commodity markets; Depreciation; Foreign exchange; Trade balances; S-Curve; Industry data (search for similar items in EconPapers)
Date: 2012
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